Breaking News From SolarCity Gives Solar Small Caps An Energy Boost

SolarCity, the largest installer of residential solar panels in the United States, has an ambitious goal: to dramatically drive down prices so that solar power can compete on an unsubsidized basis with fossil-fuel energy from the grid. The company, headed by CEO Elon Musk (of Tesla and SpaceX fame) just announced plans to acquire high-efficiency solar manufacturer Silevo, a move that, when completed, will mark the company as having achieved full integration across manufacturing, sales and installation – much like First Solar, SunPower, and SunEdison have already done.

Musk wants to control the company’s equipment supply, a move some are skeptical about. In a blog post about the acquisition of Silevo, Musk, CEO Lyndon Rive and CTO Peter Rive explained that the move was made with the intent -

to combine what we believe is fundamentally the best photovoltaic technology with massive economies of scale to achieve a breakthrough in the cost of solar power.

The authors further explained that -

at a targeted capacity greater than 1 GW within the next two years, [this plant] will be one of the single largest solar panel production plants in the world. This will be followed in subsequent years by one or more significantly larger plants at an order of magnitude greater annual production capacity.

We’ve been following SolarCity for several years and have watched it move from a small cap to a mid cap stock. There are several other companies we’ve been following that could stand to benefit from the success of SolarCity. One such company is Canadian Solar Inc. (NASDAQ:CSIQ), based in Ontario, Canada. Canadian Solar manufacturers high efficiency solar cells, solar modules, solar power systems and off grid solar power application solutions. The company has a total module production capacity of 2.4GW. Canadian Solar recently announced that it is entering into a joint venture with GCL-Poly in China to build a manufacturing site for the production of crystalline silicon solar cells. Under the terms of the agreement, the equity split will be 80% for Canadian Solar and 20% for GCL. On January 27th, CSIQ closed at $37.41 with a market cap of $1.7 billion. CSIQ  closed June 23 at $29.21, up $0.09, with a market cap of $1.61 billion. Its 52-week trading range is $8.30 – $44.50.

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